A key to the growth of solar, particularly commercial solar, is the availability of affordable storage solutions. Two recent developments suggest that we are about to see dramatic growth in this vital market sector.
One week ago the California Public Utilities Commission (CPUC) voted five to nothing approving a plan to require the three investor-owned utilities (SCE, PG&E, and SDG&E) to procure 1,325 MW of energy storage by 2020, with installation completed by no later than the end of 2024. Both SCE and PG&E are required to procure 580 MW each, with the remaining 165 MW allocated to SDG&E. 200 MW of that 1,325 MW total is to be interconnected at the customer’s site. In addition, the decision provides a timeline for this to happen with the first 200 MW to be procured by the end of next year.
Other electric service providers, like the munis, will have to procure energy storage equal to 1 percent of their annual peak load by 2020. Those storage systems can also include customer sited and/or customer-owned storage devices as long as they were installed after January 1, 2010.
Large scale pumped hydro storage (greater than 50 MW) is excluded from the program, but storage obtained from plug-in electric vehicles can be counted.
This is a tremendously significant decision as the mandate will surely drive R&D as well as deployment investment and help provide a ready market for these emerging technologies.
An announcement this week during Solar Power International shows how that investment is already starting to happen.
Stem - the company with the clever technology for using storage to “smooth out” the demand peaks that drive commercial energy costs - just announced a $5 million project finance fund with Clean Feet Investors (CFI). From the parties’ press release:
The new financing model, which Stem developed in collaboration with CFI, is designed to open access to a wider pool of customers by removing barriers to adoption, enabling up to 15 MW of energy storage to be deployed. With this financing capability, Stem hopes to follow the dramatic growth trajectory pioneered by the third party ownership model in the solar industry. Stem and CFI plan other innovative financing offers for customers including performance-based and shared savings financing solutions with the capital from this financing.
“In addition to breakthroughs in technology, Stem is focused on driving business model innovation,” said Prakesh Patel, Stem’s vice president of capital markets and strategy. “By working closely with CFI, I believe we have created a unique offering to help accelerate customer adoption of Stem systems. This transaction paves the way for Stem to become one of the first efficiency technologies to achieve bankability.”
“Deployment capital is essential for Stem to get their technology in the hands of their customers – many of whom prefer a “pay as you save” offering,” added Jigar Shah, a principal at Clean Feet, and founder of the largest solar services company, SunEdison.
Allowing companies to install Stem’s technology with little or nothing down will help those companies save money at the same time it allows Stem to ramp up. This is great news for the solar industry since it is posed to provide the energy that Stem’s system later distributes as needed to offset those costly demand peaks.
Of course, this isn’t exactly great news for the utilities who, if this technology were widely adopted, would see a huge revenue hit as more and more commercial customers were able to lop-off the most expensive energy they now have to procure. Whether it is the continuation of net-metering on the residential side or the ability to eliminate the worst of demand charges on the commercial side, the pressure on the utilities will only continue to grow. But for their customers, things have never looked brighter.
A fascinating piece over at Bloomberg Businessweek Technology turns our question into a declaration: Why the U.S. Power Grid’s Days are Numbered in a piece by three authors, Chris Martin, Mark Chediak and Ken Wells. But it isn’t the grid so much as the 3,200 utilities scattered across the landscape that are headed for extinction. (H/t SolarWakeup.com)
The article traces the story, familiar to readers of this blog, about the downward spiral facing utilities - as their prices rise, more customers get to the point where solar makes economic sense. But that switch further erodes the revenue base for the utilities so they must raise their rates yet again, driving away yet more customers and on it goes. Clearly not a sustainable future - for the monopolistic utilities. (Perhaps that is why some - and here we mean you, SCE - have so little sense of humor these days?)
Here is one of the many insightful quotes compiled by the authors:
“The technology and energy sectors will no longer simply be one another’s suppliers and customers,” the report says. “They will be competing directly. For the technology sector, the first rule is: Costs always go down. For the energy sector and for all extractive industries, costs almost always go up. Given those trajectories, counterintuitively, the coming tussle between solar and conventional energy is not going to be a fair fight.”
(Quoting from the Bernstein energy industry black book.)
Hmmm… solar beating up on the utilities so badly that it isn’t a “fair fight” is a future that many of us would pay to see.
While that future might seem inevitable to reporters viewing this from a distance, those of us in the solar industry know that we have a major fight on our hands. Today we have a sympathetic legislature in Sacramento, but that could change and our allies replaced by adversaries almost overnight. Surely the utility industry has the bucks to lobby legislators in ways that the solar industry will never be able to match.
As I said, the article makes for great Friday reading and I commend it to you.
A group of solar advocates have received a cease and desist letter from Southern California Edison over a satirical video that dares to claim that SCE “is committed to rooftop solar - and by committed we mean committed to keeping it off your roof!" Proof that SCE lacks both a sense of humor and common sense. (H/t Chris Clark at the ReWire blog on KCET.org)
The three groups threatened - presente.org, the Sierra Club (really!) and The Other 98% - have a website titled Save Rooftop Solar where the video was originally displayed. On their website they make the case that rooftop solar is good for the Latino community. That seems like a fair message to be communicating, but it is the group’s attack on SCE’s lobbying efforts that drew the IOU’s ire. Here’s the video that SCE doesn’t want anyone to see:
Now this is clearly satire, and no reasonable person viewing this would believe that SCE produced this video. Moreover, in highlighting an issue of public interest - namely SCE’s lobbying campaign directed at Latino politicians (no doubt part of their faux “equity” argument) - the use of otherwise protected symbols and logos is certainly “fair use” and thus protected. But that didn’t prevent SCE’s thin-skinned legal department, in this case Ms. Janet Combs, from sending a short-sighted nastygram:
It has come to our attention that presente.org has funded and posted a video on its website and on YouTube that infringes the Southern California Edison and Edison International (Edison) name and logo and makes false and misleading statements regarding Edison.
Specifically, the video, entitled Edison Hates Rooftop Solar, misrepresents itself as an Edison video and claims that Edison wants to “keep solar panels” off customers’ roofs through a “business plan” to “force” customers to buy “dirty energy” from “dirty power plants” that “poison poor communities.” The video claims that Edison is “spending big on Latino politicians” to make installing solar panels on customers’ roofs more expensive and discourage customers from installing solar panels.
These statements, and similar statements in the video, constitute false and misleading advertising under state and federal law. Moreover, the video’s use of the Southern California Edison and Edison International marks constitutes both federal and state trademark infringement and violates both the federal and state laws against unfair competition.
Here’s the thing - first of all, the assertion that SCE has legal claims against the producers of this video is laughable. But beyond that, when a video that practically no one has ever seen goes up on YouTube accusing you of being an evil corporation that is trying to (literally) squash your opponents, you do not counter that argument by sending C&D letters that threaten to squash your opponents. (See also, the Streisand Effect.)
Let’s hope that these groups get lots of press over this and SCE is sufficiently humiliated over their strong-arm tactics. Well, a guy can dream, can’t he?
One of the greatest impediments to continuing to drive down the cost of solar are so-called “soft cost” - the nickels and dimes extracted from solar companies by nit-picking regulations and hoops that we are forced to jump through to get permits, inspections and interconnections accomplished. Now SCE has added yet another pointless hurdle that is simply designed to drive up the soft-costs for larger residential installs - but the question is, why?
On Friday we got a notice from SCE about the latest revision to their Net Metering Interconnection Handbook and calling attention to changes in their requirements for what is known as a “line-side tap.” Now to explain why this is an issue, please bear with me as this gets a bit technical.
Normally, when we install a residential solar power system, the power comes down from the roof, to a “solar only” subpanel, to a disconnect with a performance meter and then “lands” on a circuit breaker in your main electrical panel. Most recently built or remodeled homes in our service area have 200 Amp services which means that according to the National Electrical Code we cannot attach a larger breaker for solar than a 40 Amp breaker because the sum of all power sources feeding the bus bar that runs through your service panel cannot exceed the rating of that bus by more than 20%. Assuming that you have a 200 Amp main breaker, then your bus is already fed to the 200 Amp rating by the utility. That leaves 20% beyond the 200 Amps rating for solar and that gets you to the 40 Amp limit. (There are exceptions to this, but that is the general rule.) But the code limits us further since a circuit breaker intended for continuous operation has to be derated to 80% of its listed value. Which means that my 40 Amp breaker becomes a 32 Amp breaker for continuous use (defined as a source where the maximum current is expected to last for three hours or more). Since residential systems are running at 240 volts, that limits the maximum AC power of a residential solar power system to 7.68 kW.
Now that is rarely much of a limitation since the overwhelming majority of residential systems are smaller than that. But what about those that aren’t? What about the household that has two EVs (we have such clients) and lots of roof space? How can they interconnect a larger system if the Code won’t allow a breaker larger than 40 Amps?
The answer is a line-side tap. When you use a line-side tap, you avoid connecting to the service panel bus at all. Instead, you tap onto the wires feeding your service between your meter and your main breaker. This satisfies the Code and works just fine but it is a more complicated means of interconnecting your solar power system. As a result, SCE has required that systems that call for a line-side tap have a Professional Engineer review and approve the single-line drawing (SLD) that shows how the interconnection will be made. This adds to the cost of the system - PE’s have to make a living, too - but most installers have accepted that as a reasonable cost to insure safety.
But now SCE is requiring that in addition to submitting a PE-stamped as approved SLD, we must also submit a form letter, signed by the local Authority Having Jurisdiction, approving what we are going to do before it is done. Now what is the point of that? After all, before we can commence work we need to pull a permit, which means that the AHJ will have reviewed our site plan and SLD and deemed it acceptable. Once the project is complete, again we have to interact with the AHJ, having them come out to our job site and inspect our work. It isn’t as if we were trying to slip something past the AHJ.
So what is the point of this exercise?
Here is an excerpt from SCE’s letter that they are asking us to get the AHJ to sign:
If customer choses [sic] to continue to interconnect the generating facility on the source side of the customer’s main circuit breaker (tapping ahead of the main as defined by SCE), SCE must insure that the interconnection facilities continues to meet SCE’s safety requirements. Therefore in order for SCE to accept the modified equipment, SCE will require that this letter be signed by the inspecting authority. The Inspector for the AHJ acknowledges the following:
1. That the existing customer switchgear has been altered to allow the interconnection of the generating facility to the source side of the customer’s main breaker.
2. That the altered customer switchgear continues to meet UL certification requirements or that the modified equipment has been recertified for its new configuration.
3. That the modified equipment meets all the required NEC code requirements.
To reiterate, SCE considers the modification of the switchgear to be a safety issue and thus in order for SCE to approve the proposed generating facility, SCE must receive verification of UL and NEC compliance from the local inspecting authority prior to approving the generating facility for interconnection to SCE’s distribution system. It should be noted that in addition to this endorsed letter from the inspecting authority, the customer must comply with existing requirements including P.E stamped Single Line, plot plan, equipment requirement, etc.
Now in the first place, as a general proposition this really isn’t a modification to the switchgear (i.e., your service panel) at all. Instead, this typically consists of clamping on to the existing feeder wires coming into the service - the switchgear isn’t touched. But how many AHJs are going to be willing to sign this document - particularly when the utility themselves is now declaring this to be a safety issue? How much iteration is going to be required between the installer’s PE and the AHJ to convince them to sign onto this letter? And isn’t that the entire point of having the PE stamp the drawing to begin with? The PE’s stamp is her way of saying that the proposed plan is safe and complies with the Code.
In our view this is nothing more than an attempt by SCE to complicate the process of installing larger residential systems and to drive up our costs to do so. We have requested comment from SCE about their justification for this new policy - if we hear anything we will update this post.
Yesterday we received a somewhat cryptic message from SCE titled, Battery-Backed Storage System and Net Energy Metering Eligibility. The external memo announces SCE's decision to "add additional features and impose additional conditions for a customer’s participation in Net Energy Metering (NEM) in order for SCE to ensure compliance with the NEM tariff." Not sure any of SCE's customers would consider these changes a "feature" but we decided that this should see a broader readership. Accordingly, we are publishing the memo in its entirety.
Here it is:
To: California Solar Initiative (CSI) and Self-Generation Incentive Program (SGIP) Contractors
From: Southern California Edison, Distributed Generation Customer Solutions
Date: July 22, 2013
Re: Battery-Backed Storage System and Net Energy Metering Eligibility
In recent months, Southern California Edison (SCE) has received interconnection application packages for solar photovoltaic (PV) coupled with a battery storage device. Since inverters have become more sophisticated, multiple DC energy sources, such as PV and battery storage systems, can now be configured behind a single inverter. If the design of a renewable generator is modified so that the battery storage system is integrated into the generator, SCE cannot separately meter the energy from the renewable PV generator and the non-renewable battery. As a result, SCE has to add additional features and impose additional conditions for a customer’s participation in Net Energy Metering (NEM) in order for SCE to ensure compliance with the NEM tariff.
SCE proposes to allow NEM participation for combined systems as outlined in (1) or (2) below:
1. If the battery storage device can only charge using energy generated from the renewable generator and not from the grid. In this case the battery storage device is considered an enhancement of the renewable generator. Technically speaking, power flow to the battery storage device from the Alternating Current (AC) source of the inverter is not permitted under any conditions. Thus, the inverter permits only power flow from the Direct Current (DC) energy source to the AC energy source of the inverter. This would mean that the battery storage device does not and cannot be configured to have the ability to charge from the grid. SCE will require the manufacturer to provide a technical write-up on the manner in which this requirement will be accomplished as well as a testing plan to prove this operational method. If this condition is satisfied, SCE will allow the renewable generator to operate under schedule NEM.
2. If the battery storage device is charged using energy from the grid, then protection and/or control systems must be put in place so that it can never discharge to the grid. In this case, the battery storage device is considered a non-NEM generator and acts as a non-exporting generator. Technically speaking, if the inverter permits power flow from the AC side to the DC source where the battery storage device is connected, then power flow from the battery storage device to the grid is not permitted. In other words, the battery storage device and control systems must be designed to shut down the storage device when the power flow into the facility at the Point of Common Coupling (PCC) deviates from Rule 21 under power option requirements. This method will ensure that the export will only reflect energy flow from the renewable generator, consistent with the concept of the Multiple Tariff Technology in Schedule NEM, Special Condition 5 described below. If this condition is satisfied, SCE will allow the renewable PV generator to operate under schedule NEM.
In the past, SCE received applications for renewable generators combined with storage/battery systems in which the generator and the energy storage unit had separate dedicated inverters. The renewable generator and storage/battery were not integrated as one system behind a single inverter. For these types of configurations with separate inverters, SCE treats the renewable generator as an NEM generator if they satisfy all of the NEM eligibility criteria and the storage system as a non-NEM generator. These configurations are considered Multiple Tariff Generating Facilities (Special Condition 5, Schedule NEM), which allowed SCE to separately meter the output of each unit to deduce electricity from the renewable and non-renewable resources. SCE provided NEM credit only to the renewable portion of the electricity exported under the NEM tariff.
SCE’s tariff, Schedule NEM, Special Condition 5, requires that if a generating facility configuration includes NEM and non-NEM generators, to be eligible for NEM, the generating facility must interconnect as a Multiple Tariff Generation Facilities under Generation Facilities Interconnection Application (Form 14-732) and Multiple Tariff Interconnection Agreement (Form 14-773). This special condition provides that, if you (1) install a Net Generation Output Meter (NGOM) on the NEM-eligible generator (such as PV) or (2) install protection and/or control systems such as non-export relays on the battery storage device to prevent the export of energy from the battery to the electric grid, NEM benefits will be provided to energy associated with the NEM-eligible renewable PV generator. If neither of the two options are selected and if the combined export of the generating facilities is determined not to exceed 1 megawatt (MW), the customer can choose to interconnect under the Non-Export Interconnection Agreement (Form 14-731 or 14-742) using the (uncompensated) Export Addendum (Form 14-931) whereby SCE will not give the customer any NEM credit offset or any type of compensation for any generation energy exported to the grid.
Given the necessary technical review needed to evaluate NEM compliance, SCE has determined that pending interconnection applications with a combined PV and battery storage device will need to re-apply for interconnection under the Interconnection Application and one of the applicable Interconnection Agreements shown below:
· Form 14-732: Generation Facilities Interconnection Application (Required in all cases)
· Form 14-773: Generating Facility Interconnection Agreement – Multiple Tariff (For projects with an NEM-eligible PV generator)
· Form 14-731: Non-Export Interconnection Agreement with Form 14-931: Export Addendum (For projects with a PV generator that is ineligible for NEM)
Submit an application package to Rule21@sce.com with the appropriate fees and application. For questions regarding the application process, send an email to interconnectionQA@sce.com or call 626-302-3688.
SCE wants to emphasize that throughout the industry changes in the design of PV generators and the way battery storage systems are integrated into PV generators, SCE’s position on NEM eligibility has never changed. SCE provides NEM benefits only to customers for energy exported from a renewable resource as outlined in SCE’s tariff and in accordance with California Public Utilities Code Section 2827, et seq.
Southern California Edison
California Solar Initiative
Well that cleared things up.
We aren't entirely sure what the effect of this policy will be except that it will certainly make the application process more involved and therefore more expensive.
But then, no one really thought that the IOUs were going to make adding smart storage to PV systems easy, did they?
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